Money & climate change

Dominic Thomas
May 2025 • 4 min read

Money & climate change

There are an awful lot of changes coming as to how the financial services sector can describe ESG investment solutions. We are all aware of the greenwashing that has gone on … if you are an enormous company (or even a small one) simply paying into some carbon offset scheme doesn’t really address the issue of your own actions. Equally, a so-called environmental company that makes electric cars may be run by an individual who, well, let’s say isn’t on my list of people to emulate in any way.

A sector that is high risk (you really can see all of your money disappear) is the startup, venture capital space. This is not for the faint-hearted. The sector is often looked to as the potential saviour of the planet and innovators for tomorrow. Well, we can hope that’s the case …

Here in the UK, we have Government incentives to step outside of the normal ‘investment world’ (which we call the retail investment sector) and consider a portion of your portfolio for venture capital. What has been concerning me over the last couple of years is that this and the previous Government seem to think allowing mainstream pensions to invest in this space is wise. It really isn’t. This is only for those who are willing to stake a relatively small part of their wealth in the hope of excellent returns and some serious do-gooding, with an understanding that it may also go horribly wrong.

As someone who generally advises you to have very low cost portfolios, tracking markets and not attempting to second guess the future; here I split off into a different character and acknowledge that the benefits of venture capital might be worth consideration for some of you.

EIS, SEIS and VCTs all have tax incentives … the Government adds 30%, 50% and 30% respectively to your investment. Though how it works is that you get this back as a tax refund. There are some conditions to maintaining this of course, but these are reasonable. Most investments are early stage and realistically need holding for 7-10 years as a minimum.

The pots of these investments are generally very small. Sometimes no more than half a dozen companies, rather than the multiple thousands that are in your regular portfolio (which reduces risk). The chance of failure is high, but the potential rewards can be significantly better than anything the retail markets might achieve.

Those who specialise, for example, in solutions to climate change include an EIS Fund by One Capital. I recently met with their team. I am not suggesting here that you invest in this, I want to use it as an example of the type of investment, nothing more – if you want relevant specific advice get in touch.

One of their holdings is with Bristol-based Kelpi, who make “plastic like” food containers from kelp and do the job, but without the plastic. You can have a look for yourself at their website here: https://www.kelpi.net/.

All investment managers of this type start with what they call ‘deal flow’ which is usually hundreds of people with ideas pitching them for money to develop and take their service or product to market. This is then whittled down by the investment managers to a manageable number before some deep dive due diligence is conducted. Eventually they may be left with a handful of companies that they believe have good prospects that suit their particular fund outlook.

Great ideas often fail to make great businesses; you need the right people. So this is an occasion where the managers and their hands-on approach and experience are all rather vital … and expensive. EIS, VCT and SEIS all have much higher expenses and management fees than anything you are currently invested into.

Anyway, this sort of stuff is really only for those who have used up the normal allowance options (ISAs and Pensions), but if you would like to know more and perhaps have a specific focus for a small element of your money (say on climate change) then please get in touch. The tax year end is a factor in the process.

Just for interest, here is a short video by One Planet.

Video link here

Please note that I am NOT advising you to invest in this fund, you have understood that by now, this is simply an example of what is available. Investment should always be in line with your circumstances, values and goals as closely as possible.

BACK TO ALL BLOGS

Money & climate changeJemima Thomas2025-05-09T16:50:23+01:00

HOW TO PROTECT YOUR TAX ALLOWANCES

TODAY’S BLOG

HOW TO PROTECT YOUR TAX ALLOWANCES

The government has committed to an awful lot of new spending. But the money has to come from somewhere. The unwritten rule of electioneering is to announce the spending increases during campaigning, and wait for the first post-election Budget to reveal the bad news about tax. Over the past few weeks we’ve seen suggestions of everything from some form of ‘mansion tax’ on more expensive homes, to changes in capital gains tax and tweaks in pension tax relief.

Sajid Javid’s resignation as chancellor – the person in charge of the Budget – might have derailed some of the plans in progress, but commentators are divided on what’s likely to happen next. Some think fiscal (tax) rules will be relaxed, so there’s less pressure to balance the books and spending can rise alongside tax cuts.

Let us not forget the small matter of an election manifesto pledge to get rid of ‘arbitrary tax advantages’ for the wealthy. Unfortunately we don’t have a working crystal ball to know what tax changes if any will come to fruition. We think the best way to shelter yourself from any potential tax changes is to take as much advantage as you can with the appropriate current breaks, while they still last:

Take advantage of ISAs (£20,000)
Consider a Lifetime ISA (£4,000)
Don’t forget Junior ISAs (£4,368)
Top up your pension (£40,000 and the abilty to use up unused allowances from the 3 previous tax years)
Consider salary sacrifice (employer pays your reduced NI and tax into your pension)
Take advantage of your spousal exemptions (share capital gains etc)
Claim the marriage allowance (transfer £1,250 to your spouse)
Consider your annual gifting allowance of £3,000
Use your 2019/20 Capital Gains Tax Allowance of £12,000
VCT, EIS, SEIS investment options for those that are more adventurous

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

HOW TO PROTECT YOUR TAX ALLOWANCESDominic2025-01-21T16:33:58+00:00

Investing in a Business

Solomons-financial-advisor-wimbledon-blogger

Investing in a Business

One of the ways that Government attempts to create jobs is to encourage and stimulate small businesses, start-ups or recently started businesses. The Prime Minister wants these to scale up, not simply start up. So as a regular investor (which in my world we call a retail investor) there are various ways that you are incentivized to be part of this wealth creation.

Tax effective incentives

Venture Capital Trusts, Enterprise Investment Schemes, Small Enterprise Investment Schemes are all such investment structures designed to encourage you (with tax incentives) to invest into new businesses. Generally, though not always the case, these would be businesses looking for money, to which traditional banks don’t, can’t or won’t lend. Since the credit crunch, despite the Government pouring billions into the system, most lending to small businesses has not increased. Indeed any chart on the topic would suggest that Banks are positively less than helpful.

A Different Approach

As we approach the end of the tax year, various specialist companies will produce offers for these tax efficient investments. The rules for them are fairly complex, primarily because they (the rules) seem to get changed each year. It would certainly be true to say that the degree of investment risk is generally much higher than say investing into most normal investment funds that track an index. As with most things, there are good and not so good and some downright awful. Despite being 3 or 5 year investments, in reality they are long-term investments, where the positive rewards may take some years to bear fruit, and as with almost every business, extracting money from them requires a carefully considered exit strategy and ideally several potential buyers.

The company you keep

In the latest Trainspotting film, (T2, which is a return to Edinburgh and the characters from 20 years ago) two of the characters (Renton and Simon) decide to have a proper go at running a “business”. Despite being “creative thinkers” and possessing “the gift of the gab” rather more is required to run a successful business. Sadly, their skill set and personal focus do not lend themselves to a successful outcome. Some investors could be forgiven for thinking that the degree of risk being taken is similar to that of investing into non-mainstream investments. However the only thing in common is the capability of the management of the business. Good managers can turn a bad business around, but equally a good business can be ruined by bad management. We all know that there are some very unsavory characters in business, some even cross-over into politics. Trainspotting has a particularly nasty character. As is always the case, people are key. In this form of investing, it is certainly the case that a good business plan requires a good management team to implement it.

Choose wisely

So (and here is where you imagine Ewan McGregor reading this) if you think that you might want to choose to invest in small businesses, choose to create jobs, choose wealth creation, choose something a bit different, choose a dose of tax relief, perhaps you should be thinking about choosing to invest into an EIS, SEIS or VCT. As with T2 it won’t be everyone’s cup of tea, (or drug of choice). Generally, you’ll need a minimum of £25,000 to invest. This is for those that do want to choose some of the companies that will make a mark on the next 20 years. Those that are comfortable with the risk. Those that are choosing to invest for the long-term and have a clear idea of what they are getting into. Then investing in businesses can provide a rewarding experience. But choose wisely. Here is the trailer for T2: Trainspotting.

Dominic Thomas
Solomons IFA

Investing in a BusinessDominic2023-12-01T12:18:49+00:00